UNITED STATES OF AMERICA
COMMODITY FUTURES TRADING COMMISSION
|In the Matter of:||)||CFTC Docket No. 00-22|
|DALE LUTHER MOCK||)||COMPLAINT AND NOTICE OF|
148 48th Ave.
|)||HEARING PURSUANT TO|
|Greeley, CO 80634,||)||SECTIONS 6(c) and 6(d) OF|
|)||THE COMMODITY EXCHANGE|
|)||ACT, AS AMENDED|
The Commodity Futures Trading Commission ("Commission") has received evidence from its staff which tends to show, and the Commission's Division of Enforcement ("Division") alleges that:
1. During July and August 1998, Dale Luther Mock ("Mock"), while employed as an associated person ("AP") of a registered introducing broker ("IB"), made a total of nine trades, in six customer accounts, without authorization from the customers, in violation of Section 4b(a)(i) and (iii) of the Commodity Exchange Act, as amended ("Act") and Commission Regulation ("Regulation") 166.2.
2. When two of those customers learned of unauthorized trades in their accounts, they complained to Mock about the trades. Mock then caused those two trades to be transferred to the accounts of two other customers, once again without the authorization of the customers into whose accounts the transferred trades were placed, in violation of Section 4b(a)(i) and (iii) of the Commodity Exchange Act, as amended ("Act") and Commission Regulation ("Regulation") 166.2.
3. Dale Luther Mock, whose last known address is 158 48th Avenue, Greeley, Colorado 80634, was last registered with the CFTC as an AP of an IB, from June 1997 to September 1998. The IB uncovered the unauthorized trading alleged herein and thereafter terminated Mock's employment and reported the alleged unauthorized trading to the CFTC, among others.
4. From June 1997 through September 4, 1998, Mock was employed as an AP of an IB at its Greeley, Colorado Branch Office.
5. Mock never had written power of attorney over any customer account, and he knew that he was not permitted to conduct any discretionary trading in any customer account.
6. In July and August 1998 Mock willfully executed a total of nine trades, in six customer accounts, without the customers' authorization, either written or oral, to do so. A listing of the specific unauthorized trades is set forth in the Appendix attached hereto, which is incorporated by reference herein.
7. After two of the customers complained about two of the unauthorized trades in their accounts, Mock willfully directed the futures commission merchants which maintained those customer accounts to transfer the two trades into the accounts of two other customers, without the authorization of the customers into whose accounts the unauthorized trades were transferred. A listing of the specific unauthorized transfer trades is set forth in the Appendix attached hereto, which is incorporated by reference herein.
VIOLATIONS OF THE ACT AND REGULATIONS
Violation of Section 4b(a)(i) and (iii) of the Act and Regulation 166.2:
8. The allegations contained in paragraphs 1 through 7 are realleged and incorporated herein by reference.
9. In July and August 1998, Mock violated Section 4b(a)(i) and (iii) of the Act, in that he cheated or defrauded or attempted to cheat or defraud, and willfully deceived or attempted to deceive, his customers, in or in connection with an order to make, or the making of, a contract of sale of a commodity for future delivery, made, or to be made, for or on behalf of such customers, by (a) making trades in customer accounts without the customers' authorization to make those trades in their accounts; and (b) transferring trades into customer accounts without the authorization of the customers into whose accounts the trades were transferred.
10. In July and August 1998, Mock, an AP, violated Regulation 166.2, in that he made trades in customer accounts without first obtaining either (a) the specific authorization of the customers, or the person designated by the customers to control the account, to make those trades, or (b) the written authorization of the customers to make trades in the customers' accounts without the customers' specific authorization.
11. Mock violated Sections 4b(a)(i) and (iii)of the Act and Commission Regulation 166.2 by the conduct alleged in the Complaint with respect to each trade identified in the attached Appendix and incorporated by reference herein.
12. Each unauthorized trade, including the unauthorized transfer trades, identified in the attached Appendix and incorporated by reference herein son is alleged as a separate and distinct violation of Sections 4b(a)(i) and (iii) of the Act and Commission Regulation 166.2.
By reason of the foregoing allegations, the Commission deems it necessary and appropriate, pursuant to its responsibilities under the Act, to institute public adminis-trative proceedings to determine whether the allegations set forth in Sections I -IV above are true and, if so, whether an appropriate order should be entered in accordance with Sections 6(c) and 6(d) of the Act, 7 U.S.C. §§ 9 and 13b(1994).
Section 6(c) allows the Commission to enter an order (1) prohibiting a Respondent from trading on or subject to the rules of any contract market and requiring all contract markets to refuse such person all trading privileges thereon for such period as may be specified in the Commission's Order, (2) if the Respondent is registered with the Commission in any capacity, suspending, for a period not to exceed six months, or revoking the registration of that Respondent, (3) assessing against the Respondent a civil penalty of not more than the higher of $110,000 or triple the monetary gain to the Respondent for each violation of the Act or Regulations committed after November 27, 1996, and (4) requiring restitution to customers of damages proximately caused by the violations of the Respondent.
Section 6(d) allows the Commission to enter an Order directing that the Respondent cease and desist from violating the provisions of the Act and Regulations found to have been violated.
WHEREFORE, IT IS HEREBY ORDERED that a public hearing for the purpose of taking evidence and hearing arguments on the allegations set forth in Sections I-IV above be held before an Administrative Law Judge, in accordance with the Rules of Practice under the Act, 17 C.F.R. § 10.1 et seq. (1999), at a time and place to be fixed as provided in Section 10.61 of the Rules of Practice, 17 C.F.R. § 10.61 (1999), and that all post-hearing procedures shall be conducted pursuant to Sections 10.81 through 10.1-07 of the Rules of Practice, 17 C.F.R. §§ 10.81 through 10.107 (1999).
IT IS FURTHER ORDERED that Respondent shall file an Answer to the allega-tions against him in the Complaint within twenty (20) days after service, pursu-ant to Section 10.23 of the Rules of Practice, 17 C.F.R. § 10.23 (1999), and pursuant to Section 10.12(a) of the Rules of Practice, 17 C.F.R. § 10.12(a) (1999), shall serve two copies of such Answer and of any document filed in this proceeding upon Louis Traeger, Deputy Regional Counsel, and John T. Wise, Trial Attorney, Division of Enforcement, Commodity Futures Trading Commission, 10900 Wilshire Boulevard, Suite 400, Los Angeles, California 90024 or upon such other counsel as may be designated by the Division. If Respondent fails to file the required Answer, or fails to appear at a hearing after being duly served, Respondent shall be deemed in default and the proceedings may be determined against Respondent upon consideration of the Complaint, the allegations of which shall be deemed to be true.
IT IS FURTHER ORDERED that this Complaint and Notice of Hearing shall be served upon Respondent personally or by registered or certified mail, pursuant to Section 10.22 of the Commission's Rules, 17 C.F.R. § 10.22.
In the absence of an appropriate waiver, no officer or employee of the Commission engaged in the performance of investigative or prosecutorial functions in this or any factually related proceedings will be permitted to participate or advise the decision in this matter except as a witness or counsel in a proceeding held pursuant to notice.
|By the Commission.|
|Dated: June 22, 2000||______________________|
|Jean A. Webb|
|Secretary to the Commission|
Commodity Futures Trading Commission
A. UNAUTHORIZED TRADES
Account No. Trade Description Date of Trade
|Account 19419471||Two Jan. 99 CME feeder cattle contracts||August 13, 1998|
|Account 19419521||Six Dec. 98 CME lean hog contracts||August 21, 1998|
Two Oct. 98 CME lean hog contracts
Four Oct. 98 CME lean hog contracts
Six Dec. 98 CME lean hog contracts
August 14, 1998
August 18, 1998
August 20, 1998
Three Dec. 98 CME lean hog contracts
One Feb. 99 CME pork belly contract
July 14, 1998
August 20, 1998
|Account 19419891||Six Dec. 98 CME lean hog contracts||August 27, 1998|
|Account 19419904||Six Dec. 98 CME lean hog contracts||August 27, 1998|
B. TRANSFER TRADES
Account No. Trade Description Date of Trade
|Account 19419890||Three Dec. 98 CME lean hog contracts||July 14, 1998|
|Account 19419904||Two Jan. 99 CME feeder cattle contracts||August 13, 1998|